Renting Your Facility to Generate Revenue

Leasing a facility, in part or in its entirety, to an outside horse owner or trainer can be a mutually beneficial proposition, but it can have its own problems. Farm owners interested in scaling back, or those looking for an additional revenue source, can consider leasing their facility to someone else. Here are a few things to consider whether you are the leasing party, or the lessee.

View from a lessee: Wondering how to find that perfect farm or barn to lease? Word-of-mouth is typically how such opportunities are discovered. “Ask veterinarians, farriers, etc.,” suggested Dodie Howard, professional Quarter Horse trainer in Central, New York. “Those are the people out there traveling to specific places and usually know what is going on with the facilities.”

If you are looking for a facility to lease, keep in mind that the old business axiom is true of this potential income stream: The three most important things about your business are location, location, location. This is true whether you are a boarding, training, or breeding farm.

“Being conveniently located off of major highways is very important,” she said. “Being easily accessible to those clients who have a distance to travel, and also easy for trucks and trailers to navigate (to and from your facility, and around the farm itself), is important as well.”

The other bonus is clientele, if you lease a facility in a certain area, and may have old clientele moving with you. But don’t forget that opportunity awaits in this new area. As Howard said, there is always room for local customers.

Also keep in mind to look at all of the facilities, not just the barn. Are the arenas and footing suitable to your discipline? Does the farm already have barrels, jump standards and poles, a dressage arena, equipment to tend the arena, trail riding options?

View from a lessor: When considering leasing, it is important to consider who will be in charge. If you are trying to reduce your work load, make sure that is part of the deal. Depending on the size of your current facility and what the lessee is looking to do, you might end up working even more. If you have a barn manager, that person might suddenly have more horses, people and maintenance. But however the situation unfolds, there needs to be a main person who has final say.

“It is much easier to deal with one person in charge rather than 10,” said Shelley Spielman, venue manager at Stable View Farm in Aiken, South Carolina.

Stable View Farm was purchased with the intent to lease the facility even though it might have first operated as a private barn. “The biggest issue with leasing is wear and tear on the grounds and facilities,” she said. “We have been very lucky and have not had any issues.”

Facilities and equipment maintenance, pasture upkeep and purchasing are all part of what will have to be managed between the lessor and lessee.

Before any hands are shaken or deals verbally agreed upon, ask the potential lessee for references, then call all of them with a set of questions planned out in writing ahead of time. “Talk to the past facility owners provided for references to make sure the lessee will make a good client,” Spielman added.

Those questions might include:

How do you know this person? (It makes a difference whether the person is a long-time border, attending veterinarian, or childhood friend.)

What is this person’s horse background?

Did the person take good care of the facilities and grounds?

Did the person take good care of the horses?

Was the person reliable as a (trainer, manager, breeding farm operator)?

Do you consider this person a good businessman/woman?

Did the person pay bills on time?

Why is this person changing locations?

Has the person been convicted of a felony?

I would like to help this person be successful in my facility. What is something that would help this person be successful? (This is a sideways method of determining the person’s weak points.)

You can probably add your own questions to this list based on what you know having talked to the potential lessee. For example, if they have never been out on their own before, do they have a line of credit to get started or do they have a financial backer? Have they ever taught that discipline before? Do they compete, and if so, in what discipline and how successfully?

For both parties: Both the lessor and lessee should insist on a written contract before any action takes place. And before entering into a lease agreement as the lessor or the lessee, have your attorney create or read over the written agreement. Clearly identify the expectations of both parties. State which party is responsible for utilities, removal of manure, purchasing of supplies, repairs, etc.